Feb 7 (Reuters) -ICE cotton futures gained for the third day hitting a fresh high in more than four months on support from higher oil and lower dollar, while focus shifted to supply and demand report from U.S. Department of Agriculture (USDA).

* Cotton contracts for March CTc1 rose 0.81 cents or about 1% to 88.35 cents per lb by 11:13 a.m. ET (1613 GMT) after hitting their highest since late September.

* Investors await the release of the World Agriculture Supply and Demand Estimates (WASDE) report, due on Feb. 8.

* Supporting cotton, oil prices also rose for a third day after U.S. crude inventories grew less than expected and a cut in the forecast for output growth in the world's biggest producer reduced the likelihood of oversupply. O/R

* Higher oil prices make polyester, a cotton substitute expensive.

* The dollar retreated from a near three-month high against the euro hit a day earlier, making cotton a little less expensive for foreign buyers. USD/

* "The crop is smaller and there's not much selling left from the grower side," said Peter Egli, director of risk management at British merchant Plexus Cotton.

* The demand is not physical but self inflicted and "sometimes it's just as simple as more buyers than sellers."

* After a series of robust export sales data, traders are now looking forward to the USDA weekly sales report due on Thursday which showed net sales of 349,400 running bales last week. EXP/COT

* Weekly shipments have stayed above 200,000 bales in five of the previous six reports.

* Wall Street gained on Wednesday, with the benchmark S&P 500 scaling a new record high, as investors took stock of major corporate earnings and monitored remarks from policymakers for more clues on interest-rate cut outlook. .N

Reporting by Rahul Paswan in Bengaluru; Editing by Shailesh Kuber